SINGAPORE: Fuel oil's timespreads rebounded to parity in early Monday trade but players continued to eye demand from utilities and bunker marine fuel. Fuel oil inter-month premiums have been on a sharp downtrend since the beginning of October because of ample supply and lacklustre physical demand.
Trading was subdued but most players valued the November/December and December/January timespreads at parity.
Fuel oil's crack spreads were also higher following drops in crude oil. The November crack narrowed 49 cents a barrel to Dubai to reach its highest since November 11, according to Reuters data.
In naphtha, the prompt November/December timespread dropped 50 cents a tonne to a $9.00 backwardation. Prompt naphtha timespreads have been trading in a tight $8.50-9.50 a tonne backwardation since the beginning of October as demand from petrochemical makers has been steady. Gains were, however, limited because of the recent dip in European gasoline and naphtha values.
In gasoil, prompt timespreads were mostly weaker as physical demand has begun tapering off, going into the fourth quarter of the year. On the other hand, regrade spreads, the differential between jet fuel and gasoil prices, held steady on the back of robust demand for jet fuel.
Front-month December Brent futures dropped $1.82 per barrel to $110.88 per barrel from Friday's Asia close.
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FUEL OIL
Fuel oil's November/December timespread inched up 13 cents per tonne to parity. The January/February contract was steady from Friday when the timespread was valued at parity.
The November crack narrowed 49 cents to a discount of $8.52 per barrel to Dubai. The December crack was valued 55 cents narrower at a $7.90 discount to Dubai.
The November, December 180-cst fixed-price swaps were both valued at $645.50 a tonne, down $8.13-8.25.
NAPHTHA
Naphtha CFR Japan's November/December timespread was 50 cents lower at a backwardation of $9.00. The December/January contract was 25 cents higher at a backwardation of $8.75.
The CFR December crack widened $1.01 to a discount of $8.77 and the January discount was 96 cents wider at $8.99 per barrel to Brent crude.
The CFR November swap dropped $26.00 to $928.00 per tonne, while the FOB Singapore November swap shed $1.40 to $103.45 per barrel.
GASOIL
Gasoil's November/December timespread was 1 cent lower in a backwardation of 26 cents per barrel. The December/January contango was 15 cents lower at $1.15 per barrel.
The November crack rose 44 cents to a premium of $18.98, while the December premium was 53 cents higher at $19.34 per barrel to Dubai crude.
November's regrade, the spread between jet fuel and gasoil, was largely steady at a premium of $1.70. The December premium stood at a premium of $1.20 per barrel.
November and December fixed-price contracts were at $126.81 and $126.55 per barrel respectively, down $1.29-1.30 , or around 1.01 percent.
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